is $1.70 per share (i.e. D). Under present conditions, this dividend 2. (17 points) The...
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is $1.70 per share (i.e. D). Under present conditions, this dividend 2. (17 points) The current dividend of the stock of the Seneca Company is expected to grow at a rate of 78 annually for the foreseeable future. The beta of Seneca's stock is 1.2. rate is 3.58, and the expected market return is 10% pa The risk-free interest a. (7 points) What is the value of a share of Seneca's stock? Seneca's management plans to introduce a new solar panel that will greatly reduce the cost of solar energy. As a result, the dividend growth rate is expected to increase to 8* annually. Management also expects that the stock's beta will increase to 1.4. (7 points) What is the new value of a share of Seneca's stock if the new solar panel is introduced? c. (3 points) Would you recommend this new solar panel to Seneca's management? Why? b
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